How to rise above debt

Ex-QDMSA major concern in non-bank credit is where a consumers payments are misallocated or they do not receive a statement on their account.

Consumers are often forced to seek help because they can’t get basic information out of a big corporate. Much of my behind-the-scenes work involves sending e-mails to media liaison people at these organisations on behalf of their customers who weren’t able to get an appropriate response from the company.

Or in some cases, any response at all.

The Credit Ombud’s office also gets regular approaches from consumers who are having trouble being heard by the companies they are giving business to.

In 2010 the office expanded its mandate to take on what it calls “non-bank credit disputes” – complaints about clothing, retail and furniture accounts as well as about loans from micro-lenders and credit providers other than banks.

In all, 1 337 such non-bank credit disputes were finalised by the ombud’s office last year, ombud Manie van Schalkwyk revealed in his annual report yesterday. And more than R1.6 million was recovered for consumers.

“The major concern in the area of non-bank credit is in terms of statements, where payments are misallocated or statements are not forthcoming from credit providers,” Van Schalkwyk said.

“This should be an easy issue for the credit providers to fix,” he told Consumer Watch.

The Credit Ombud received 14 167 complaints and enquiries last year, recovering R2.4m for complainants, and finding in favour of consumers in 53 percent of cases.

In addition to dealing with complaints about the information credit bureaus store about our credit-worthiness and non-bank credit issues, the Credit Ombud’s office has, since last April, also tackled debt counselling complaints.

A total of 414 debt counselling cases had been finalised by the end of the year.

“We receive intricate and complicated matters that require an in-depth and comprehensive investigation, as well as urgent matters where a sale in execution or a repossession is imminent.”

The office halted a number of sales in execution and car repossessions, allowing consumers to keep their assets while servicing their debts.

With so many parties involved in debt counselling – the consumer, the debt counsellor, the payment distribution agent and the credit provider – fingers point in all directions when a case goes wrong.

“But in many cases we investigated, we found that the consumer simply couldn’t afford to pay the agreed lump sum amount to settle their debts,” Van Schalkwyk said.

“Debt counselling isn’t for everyone – the very poor can’t be helped because it would take them 30 years to pay off their car.”

Those cases aside, he said, in the remaining cases, the debt counsellor was often found to be at fault.

“In 32 percent of cases, the debt counsellor simply closed their offices without notifying their clients, and in 21 percent of cases the debt counsellor had failed to communicate properly with their client.”

“Consumers are advised to choose their debt counsellor very carefully – check with the National Credit Regulator that they are registered, and then seek out references,” Van Schalkwyk said.

“And then, once you’ve appointed a debt counsellor, don’t simply hand over your problem and sit back – you must be very actively involved in the process.”

That includes making sure you get regular statements confirming where your money is going and how your debt is reducing.

As with other ombud offices, the service is free.

On average, the organisation took 41 days to finalise a dispute last year.

With regard to credit information disputes, Van Schalkwyk said it was worrying that monthly payment profile records were not being updated by some credit providers and rescinded judgments remained listed by credit bureaus.

“Fraudulent rescission documents are being produced by consumers and the credit bureaus are having to be more vigilant in investigating these,” he said.

“As a result, credit bureaus are taking longer than the required 20 working days to update their records.”

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